Child Nutrition and WIC Reauthorization Act Amendments

DEPARTMENT OF AGRICULTURE

Food and Consumer Service

7 CFR Chapter II and Part 226

RIN 0584-AC20

Child Nutrition and WIC Reauthorization Act Amendments

AGENCY: Food and Consumer Service, USDA.

ACTION: Interim rule, with request for comments.

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SUMMARY: This rule incorporates changes to the Child and Adult Care

Food Program (CACFP) required by the Child Nutrition and WIC

Reauthorization Act of 1989 and the Healthy Meals for Healthy Americans

Act of 1994 by: providing administrative funds to family day care home

sponsors for expansion into low-income or rural areas; granting

federally funded income-eligible Head Start participants automatic

eligibility for free CACFP meals without further application or

eligibility determination; and allowing the use of administrative funds

to assist unlicensed day care homes in becoming licensed. These

revisions are intended to encourage Program participation in low-income

and rural areas and to reduce the level of administrative and paperwork

burden for Federal, State and local Program administrators and for

Program participants. In addition, this rule amends 7 CFR chapter II to

reflect the renaming of the Food and Consumer Service as the Food and

Nutrition Service.

DATES: This rule is effective April 27, 1998 with the exception of the

amendments to the heading of 7 CFR chapter II and to the references in

the chapter, which are effective November 25, 1997. To be assured of

consideration, comments must be postmarked on or before August 25,

1998.

ADDRESSES: Comments should be addressed to Robert M. Eadie, Chief,

Policy and Program Development Branch, Child Nutrition Division, Food

and Nutrition Service, United States Department of Agriculture, 3101

Park Center Drive, Room 1006, Alexandria, Virginia 22302. All written

submissions will be available for public inspection at this location,

Monday through Friday, 8:30 a.m. to 5:00 p.m.

FOR FURTHER INFORMATION CONTACT: Mr. Eadie or Ed Morawetz at the above

address or by telephone at (703) 305-2620.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This rule has been determined to be significant and was reviewed by

the Office of Management and Budget under Executive Order 12866.

Public Law 104-4

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub.

L. 104-4, establishes requirements for Federal agencies to assess the

effects of their regulatory actions on State, local, and tribal

governments and the private sector. Under section 202 of the UMRA, the

Food and Nutrition Service generally must prepare a written statement,

including a cost-benefit analysis, for proposed and final rules with

``Federal mandates'' that may result in expenditures to State, local,

or tribal governments, in the aggregate, or in the private sector, of

$100 million or more in any one year. When such a statement is needed

for a rule, section 205 of the UMRA generally requires the Food and

Nutrition Service to identify and consider a reasonable number of

regulatory alternatives that achieves the objectives of the rule.

This rule contains no Federal mandates (under the regulatory

provisions of Title II of the UMRA) for State, local, and tribal

governments or the private sector of $100 million or more in any one

year. Thus the rule is not subject to the requirements of sections 202

and 205 of the UMRA.

Executive Order 12372

The Child and Adult Care Food Program is listed in the Catalog of

Federal Domestic Assistance under No. 10.558. For the reasons set forth

in the final rule in 7 CFR 3015, Subpart V, and related notice

(published at 48 FR 29115, June 24, 1983) CACFP is included in the

scope of Executive Order 12372 which requires intergovernmental

consultation with State and local officials.

Regulatory Flexibility Act

This rule has been reviewed with regard to the requirements of the

Regulatory Flexibility Act (5 U.S.C. 601-612). Shirley R. Watkins,

Under Secretary, Food, Nutrition, and Consumer Services, has certified

that this rule will not have a significant economic impact on a

substantial number of small entities. Even though Head Start agencies

will benefit from the reduction of paperwork for those participants who

qualify for automatic free meal eligibility, these benefits will not

have a significant economic impact. The Department of Agriculture does

not anticipate any adverse fiscal impact which would result from

implementation of this rulemaking.

Executive Order 12988

This interim rule has been reviewed under Executive Order 12988,

Civil Justice Reform. This rule is intended to have preemptive effect

with respect to any State or local laws, regulations or policies which

conflict with its provisions or which would otherwise impede its full

implementation. This rule is not intended to have retroactive effect

unless it is so specified in the ``Effective Date'' section of this

preamble. Prior to any judicial challenge to the provisions of this

rule or the application of its provisions, all applicable

administrative procedures must be exhausted. In the CACFP, the

administrative procedures are set forth under the following

regulations: (1) Institution appeal procedures in 7 CFR 226.6(k), and

(2) Disputes involving procurement by State agencies and institutions

must follow administrative appeal procedures to the extent required by

7 CFR 226.22 and 7 CFR Part 3015.

Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.

3507), this notice invites the general public and other public agencies

to comment on the information collection.

Written comments must be received on or before April 27, 1998.

Comments concerning the information collection aspects of this

interim rule should be sent to the Office

[[Page 9722]]

of Information and Regulatory Affairs, OMB, Room 3208, New Executive

Building, Washington, D.C. 20503, Attention: Wendy Taylor, Desk Officer

for the Food and Nutrition Service. A copy of these comments may also

be sent to Mr. Eadie at the address listed in the ADDRESSES section of

this preamble. Commenters are asked to separate their information

collection requirements from their comments on the remainder of the

interim rule.

OMB is required to make a decision concerning the collection of

information contained in this interim regulation between 30 to 60 days

after the publication of this document in the Federal Register.

Therefore, a comment to OMB is best assured of having its full effect

if OMB receives it within 30 days of publication. This does not affect

the deadline for the public to comment to the Department on the interim

regulation.

Comments are invited on: (a) Whether the collection of information

is necessary for the proper performance of the functions of the agency,

including whether the information will have practical utility; (b) the

accuracy of the agency's estimate of the burden of the collection of

information, including the validity of the methodology and assumptions

used; (c) ways to enhance the quality, utility, and clarity of the

information to be collected; and (d) ways to minimize the burden of the

collection of information on those who are to respond, including

through the use of appropriate automated, electronic, mechanical, or

other technological collection techniques or other forms of information

technology.

The title, description, and respondent description of the

information collections are shown below with an estimate of the annual

reporting and recordkeeping burdens. Included in the estimate is the

time for reviewing instructions, searching existing data sources,

gathering and maintaining the data needed, and completing and reviewing

the collection of information.

Title: 7 CFR Part 226, Child and Adult Care Food Program.

OMB Number: 0584-0055.

Expiration Date: July 31, 2000.

Type of Request: Revision of existing collection.

Abstract: The rule, Child Nutrition and WIC Reauthorization Act

Amendments, implements the provision included in Pub. L. 103-448, the

Healthy Meals for Healthy Americans Act of 1994, that allows a

Federally funded income eligible Head Start participant to be eligible

for free meals under CACFP without further application. In addition,

the rule also implements the provision included in Pub. L. 101-147, the

Child Nutrition and WIC Reauthorization Act of 1989, that makes

additional administrative funds available to family day care home

sponsors to reach children located in low-income or rural areas. In

accordance with the Paperwork Reduction Act of 1995, the Department is

providing the public with the opportunity to provide comments on the

information collection requirements of the interim rule as noted below:

Estimated Annual Reporting and Recordkeeping Burden

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Annual Average Annual

Section number of Annual burden per burden

respondents frequency response hours

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7 CFR 226.12(b), Day care home sponsors submit application

and enter into agreement for expansion funds:

Existing................................................. 0 0 0 0

Proposed................................................. 388 1 2.5 970

7 CFR 226.12(b), State agency approval of expansion funds

requests:

Existing................................................. 0 0 0 0

Proposed................................................. 54 7 1.5 567

7 CFR 226.23(e), All households except for those with income

eligible Head Start participants:

Existing................................................. 687,562 1 .05 34,378

Proposed................................................. 336,304 1 .075 25,223

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Estimated Total Annual Burden on Respondents:

Total Existing Burden Hours 34,378

Total Proposed Burden Hours 26,760

Total Difference -7,618

Public Participation

In accordance with the requirements of 5 U.S.C. 553, the Under

Secretary for Food, Nutrition, and Consumer Services has determined

that good cause exists for not requiring notice and comment before

making this rule effective. In Section 708(k)(3)(A) of Pub. L. 104-193,

the Personal Responsibility and Work Opportunity Reconciliation Act of

1996, Congress directed the Secretary of Agriculture to issue as

interim regulations by January 1, 1997 those provisions of this

rulemaking applicable to expansion funds and the use of administrative

funds to assist day care home licensing. Therefore, notice and public

comment before the regulations in this rulemaking on those matters are

implemented is impracticable. The Under Secretary for Food, Nutrition,

and Consumer Services has also determined that the remaining provisions

of this rulemaking may also be implemented without prior notice and

comment. Those provisions related to Head Start participant eligibility

for CACFP are nondiscretionary. Thus, prior notice and comment are

unnecessary as it would serve no practical purpose. As specified above,

the Department will consider comments on all regulations implemented by

this rulemaking and will address those comments in future rulemakings.

Background

On November 10, 1989, the Child Nutrition and WIC Reauthorization

Act of 1989 (Pub. L. 101-147) made a number of changes to the Child

Care Food Program by amending Section 17 of the National School Lunch

Act (NSLA) (42 U.S.C. 1766). In addition to changing the name of the

Program to the Child and Adult Care Food Program (CACFP) in Section

105(a), Pub. L. 101-147 contained provisions which: (1) simplified the

free and reduced price application process, (2) established a \1/3\

daily Recommended Dietary Allowance (RDA) nutritional requirement for

lunches served in adult day care centers, (3) made additional

administrative funds available to family day care home sponsors to

reach children located in low-income or rural areas, (4) permitted

State agencies to allow every-other-year applications by institutions,

(5) allowed State governors to designate a separate State agency to

administer the adult portion of the CACFP, (6) changed the basis for

[[Page 9723]]

making commodities available to State agencies, and (7) made two

miscellaneous technical changes.

In response to the above-referenced legislative provisions, the

Department published a final rule on January 16, 1990 at 55 FR 1376

which changed the name of the Program from the Child Care Food Program

to the Child and Adult Care Food Program and a final rule on July 14,

1993 at 58 FR 37847 on a meal pattern to be used in adult day care

centers. The adult meal pattern rule contained the requirement found in

section 105(b)(3)(A) of Pub. L. 101-147 that lunches served in adult

day care centers provide approximately one-third of the Recommended

Dietary Allowances established by the Food and Nutrition Board of the

National Research Council of the National Academy of Sciences to

participating individuals. Finally, the Department has issued a final

rule which implemented those provisions of Pub. L. 101-147 related to

the content and processing of free and reduced price applications (61

FR 25550, May 22, 1996) and an interim Child Nutrition and WIC

Reauthorization Act of 1989 and Other Amendments Rule concerning

provisions 5, 6, and 7 above (62 FR 23613, May 1, 1997). The expansion

funds provision contained in Pub. L. 101-147 is included in this

interim regulation, while the provision regarding two-year applications

is discussed below.

On October 6, 1994, the Healthy Meals for Healthy Americans Act of

1994 (Pub. L. 103-448) amended section 17 of the NSLA. Pub. L. 103-448

included provisions which: (1) allow a Federally-funded income eligible

Head Start child to be considered automatically eligible for free CACFP

meals without further application or eligibility determination; (2)

allow the use of administrative funds to assist unlicensed day care

homes in becoming licensed; and (3) permit State agencies to allow

three-year applications from institutions.

The preamble to this interim rulemaking provides an in-depth

discussion of the first two provisions. The third, which amended the

provision from Pub. L. 101-147 permitting State agencies to take two-

year applications from institutions, will be proposed in a future

regulation which is designed to streamline current Program

requirements, where feasible, for State and local Program

administrators.

1. Expansion Funds for Low-Income or Rural Areas

Section 105(b)(1)(A) of Pub. L. 101-147 amended section 17(f)(3)(C)

of the NSLA (42 U.S.C. 1766(f)(3)(C)) to provide for additional

administrative payments to day care home sponsoring organizations

wishing to expand into low-income or rural areas. This amendment was

made to the NSLA because of evidence demonstrating that low-income and

rural areas are generally underserved by family and group day care

homes participating in the CACFP and that sponsoring organizations may

encounter higher-than-normal costs when expanding into those areas.

Current section 226.12(b) of the Program regulations contains a

reference to the availability of start-up payments to develop or expand

Program operations in day care homes. In the past, these funds have

been employed to extend the Program without specific regard for income

or geographic considerations. ``Expansion funds,'' as that term is used

in section 105(b)(1)(A) of Pub. L. 101-147, are only to be available

for extending the Program into low-income or rural areas presently

unserved or underserved by the Program. Given the broad similarity

between the intended use of expansion funds provided for by Pub. L.

101-147 and start-up payments presently provided by the Department to

stimulate Program growth, the Department has been guided extensively by

its experience with start-up payments in developing the interim

implementation of expansion payments discussed below.

Accordingly, this interim rulemaking amends section 226.2 to add a

new definition of ``expansion payments'' which limits the availability

of these funds to expanding the Program to day care homes located in

low-income or rural areas and amends the existing definitions of the

terms ``administrative costs'' and ``start up payments'' for

consistency.

Basic Eligibility

Under section 226.12(b) of existing CACFP regulations, four types

of organizations are eligible for start-up funds to develop or expand

day care operations. They are: (1) prospective sponsoring organizations

of day care homes; (2) participating sponsoring organizations of child

care centers or outside-school-hours care centers which intend to

sponsor day care homes; (3) independent centers which intend to sponsor

day care homes; and (4) participating day care home sponsoring

organizations with fewer than 50 homes. These four categories were

established in regulations issued by the Department on January 22, 1980

(45 FR 4960, 4966).

The Department believes that expansion funds should be made

available only to currently participating sponsoring organizations of

family day care homes. Because of their experience with Program

requirements these organizations will be best suited to efficiently and

effectively expand the Program. Sponsors eligible for start-up funds

would have access to expansion funds once they became active family day

care home sponsoring organizations if they wish to expand into low-

income or rural areas.

Accordingly, this interim rulemaking amends section 226.12(b) to

limit the availability of expansion funds to participating sponsoring

organizations of family day care homes.

Time Restrictions

Section 105(b)(1)(F) of Pub. L. 101-147 amended section 17(f)(3)(C)

of the NSLA (42 U.S.C. 1766 (f)(3)(C)) to provide that ``[i]nstitutions

that have received start-up funds may also apply at a later date for

expansion funds.'' In order to implement this provision in an orderly

manner, the Department believes that it is appropriate to require some

minimum amount of time to elapse between the receipt and expenditure of

start-up funds and the receipt of expansion funds. While sponsors may

add homes on a regular basis without start-up funds, the relatively

large number of homes brought into a sponsorship as a result of

receiving start-up funds will make significant demands on a sponsor's

resources. Sponsoring organizations which have just begun Program

operations or have expanded their operations with start-up funds need

adequate time to adjust to their new responsibilities. We believe that

a full year's experience with its new homes should be adequate to

accomplish this.

Accordingly, this interim rulemaking amends section 226.12(b) by

prohibiting a sponsoring organization which has received start-up funds

from applying for expansion funds until 12 months after it has

satisfied all its obligations under its start-up agreement with the

State agency.

Payment Limitations

Section 226.12(d) of current regulations limits the number of homes

on which the start-up funds calculation is based to 50 homes or, for

existing sponsors of homes, 50 minus the number of homes already

operated by the sponsor. Consistent with this start-up limitation, we

are limiting to 50 the number of homes on which expansion funds

calculations are based. Unlike the start-up funds limitation, this 50-

home limit does not include homes already operated by the sponsoring

organization

[[Page 9724]]

requesting the funds. We are extending the 50-home limitation to

expansion funds because we believe that payments in that amount give

sponsoring organizations a significant level of funding with which to

expand into low-income or rural areas, as well as an amount which

provides support for a manageable level of expansion.

Section 17(f)(3)(C) of the NSLA (42 U.S.C. 1766(f)(3)(C)), as

amended by section 105(b)(1) of Pub. L. 101-147, limits the amount of

expansion funds that may be paid to a sponsoring organization to ``not

less than the institution's anticipated reimbursement for

administrative expenses under the program for one month and not more

than the institution's anticipated reimbursement for administrative

expenses under the program for two months.''

The current maximum per-home administrative reimbursement rate for

the first 50 homes is $75 (62 FR 37702, July 14, 1997). Therefore,

using these rates, sponsoring organizations applying for expansion

funds are eligible for an amount not less than: one month times the

number of expansion homes (up to 50) times $75 per home; and not more

than two months times 50 homes times $75 per home (i.e., $7,500). As

with start-up funds, the amount of expansion funds ultimately received

by a sponsoring organization may not exceed the amount actually

expended by it. Also, the State agency must consider the anticipated

amount of expansion funding to be paid and alternate sources of funds

available to the sponsoring organization for such purposes when

evaluating the sponsor's plans for expansion. Finally, the Department

wishes to emphasize that State agencies should carefully review a

sponsoring organization's expansion plans to ensure that the activities

described in the plan support the amount requested.

Accordingly, this interim rulemaking amends section 226.12(b) by

establishing limits on expansion funds to not less than one and not

more than two months of administrative payments for up to 50 homes at

the maximum current per home/per month payment.

The Department anticipates that most sponsoring organizations will

be approved for expansion payments only once. However, if a sponsoring

organization has satisfactorily expanded into the area(s) for which

expansion fund applications were originally made, it may apply for a

second round of expansion payments for expansion into other low-income

and rural areas. This application must justify the need for further

expansion and must be approved by the State agency. A sponsoring

organization is not eligible to apply for a second round of expansion

funds until at least 12 months after the sponsoring organization has

satisfied all obligations under its initial or prior agreement.

Accordingly, this interim rulemaking amends section 226.12(b) to

allow sponsoring organizations to receive expansion payments once,

unless 12 months have elapsed and the sponsor reapplies and can justify

the receipt of further funds for expansion into other areas.

Definitions of Low-Income or Rural Area

As discussed above, section 105(b)(1)(A) of Pub. L. 101-147

requires that expansion funds be used to help reach homes in low-income

or rural areas. The statute is silent, however, with regard to how

``low-income'' and ``rural'' are to be defined. In the absence of any

specific statutory direction, the Department has been guided in this

interim rulemaking by the corresponding definitions established in 7

CFR part 225 for the Summer Food Service Program (SFSP) and, more

recently, in the definition of tier I homes promulgated in section

17(f)(3)(A)(ii) of the NSLA as amended by section 708(e)(1) of Pub. L.

104-193, the Personal Responsibility and Work Opportunity

Reconciliation Act of 1996, and section 226.2 of the CACFP regulations.

The SFSP regulations (7 CFR 225.2) define rural as: ``(a) any area

in a county which is not a part of a Metropolitan Statistical Area or

(b) any `pocket' within a Metropolitan Statistical Area which, at the

option of the State agency and with FCSRO concurrence, is determined to

be geographically isolated from urban areas.'' This definition was

promulgated in part 225 in response to a provision in section 13(b)(4)

of the NSLA (42 U.S.C. 1761(b)(4)) which directed the Department to

study the administrative costs associated with operating the SFSP and,

thereafter, to establish administrative reimbursement rates which

reflect the variable costs incurred by different types of sponsors.

This study indicated that sponsors which prepare their own meals and

those which operate in rural areas incur costs higher than those of

other sponsors (44 FR 36365, January 2, 1979). Therefore, a higher

reimbursement rate was established for sponsors meeting the

aforementioned definition of ``rural''. Given the fact that expansion

funds were provided under Pub. L. 101-147 in order to help defray the

costs associated with moving into rural areas, and the fact that the

definition of ``rural'' in part 225 has been successfully used to

distinguish between urban and rural sponsors in the SFSP for more than

15 years, the Department believes it appropriate to incorporate the

same definition of ``rural'' for the CACFP. The Department periodically

updates the list of Metropolitan Statistical Areas, as defined by the

Census Bureau, and State administrators of the CACFP will be notified

when future updates are made.

Accordingly, this interim rulemaking amends section 226.2 by adding

a definition of ``rural area'' as described above to be used by State

agencies when determining the eligibility of sponsoring organizations

for expansion funds.

With regard to ``low-income'' areas, SFSP regulations reflect the

definition found in section 13(a)(1)(C) of the NSLA (42 U.S.C.

1761(a)(1)(C)) for ``areas in which poor economic conditions exist.''

The statute defines such areas as those ``in which at least 50 percent

of the children are eligible for free or reduced price school meals, as

determined by information provided from departments of welfare, zoning

commissions, census tracts, by the numbers of free and reduced price

lunches or breakfasts served to children attending public and nonprofit

private schools located in the area of program food service sites, or

from other appropriate sources * * *.'' Similarly, section

17(f)(3)(A)(ii) of the NSLA as amended by section 708(e)(1) of Pub. L.

104-193 defines low-income areas in which tier I homes are located as

areas in which at least 50 percent of the children are eligible for

free or reduced priced meals, as defined by elementary school or census

data.

The Department sees considerable similarity between the intended

application of these statutory definitions and their potential

application for determining eligibility for expansion funds in the

CACFP. Because the SFSP is intended to provide free meals to children

in low-income areas, the statute defines ways in which local sponsors

can document the socioeconomic status of areas, not households or

individuals. Similarly, the statute governing CACFP intends to target

Program benefits to low-income areas through an eligibility definition

based primarily on geographic areas. The Department also believes that

sponsoring organizations wishing to obtain expansion funds to move into

low-income areas should only be expected to demonstrate the need of the

area in broad terms. Using the precedent already set in SFSP and CACFP,

the Department believes it appropriate and reasonable to apply similar

criteria to the CACFP expansion funds provisions. Specifically, the

Department will utilize

[[Page 9725]]

the area-based definition of low-income eligibility established in

paragraphs (b) and (c) of the definition of ``tier I day care home'' in

section 226.2, as promulgated in the recently published rule concerning

the two-tier reimbursement system for family day care homes (62 FR 889,

January 7, 1997).

The Department does not believe that it would be appropriate to

permit sponsoring organizations to target individual day care home

providers outside of low-income areas with expansion funding. The

statutory language which makes expansion funds available speaks of

using these funds to target providers in low-income or rural areas, not

low-income providers located outside of such areas. Although the two-

tiered reimbursement system for day care homes does permit low-income

providers outside of low-income areas to receive tier I rates, use of

expansion funds to reach these providers will not necessarily promote

the targeting of Program benefits to low-income children. For these

reasons, this interim rule prohibits sponsors from using expansion

funds to target individual day care homes that are not located in low-

income areas; only homes in rural areas or in low-income areas, as

defined in paragraphs (b) and (c) of the definition of tier I day care

home in section 226.2, may be targeted for use of expansion funds.

Over time in the SFSP, it has been found that there are two primary

sources of data that may be used to determine whether an area is one in

which poor economic conditions exist-school data and census data. Of

these, school data should always be consulted first since it is

collected annually and is, therefore, generally more current and

accurate than census data. Census data should be used when school data

is unavailable or does not accurately represent the economic status of

the area in question.

To establish an area's eligibility for expansion funding using

school data, 50 percent or more of the children in the local area into

which the sponsor wishes to expand must be eligible for free or reduced

price school meals under the National School Lunch and School Breakfast

Programs. In accordance with procedures established in the interim rule

concerning the two-tier reimbursement system, sponsors will annually

receive from their State agency a list of all elementary schools in the

State in which at least 50 percent of the enrolled children are

eligible for free or reduced price meals. As required by section

226.6(f)(9), the first such list will be available to sponsors no later

than April 1, 1997, while subsequent lists will be provided by February

15 of each year. In many cases, this information alone will enable

sponsors to target their expansion efforts to the neighborhoods served

by these elementary schools. The State agency would then determine

whether the areas targeted for expansion by the sponsor were areas

served by a school with 50 percent or greater free or reduced price

enrollment.

As discussed above, experience with the SFSP has shown school data

to be the best indicator of low-income areas. However, sponsors may

also choose to document the area's eligibility for expansion by using

census data. The Department expects that census data should be used

only when school data is unavailable or does not accurately represent

an area's economic status. Circumstances which might warrant the use of

census data instead of school data include: (1) the area targeted for

expansion is part of a rural area, where geographically large

elementary school attendance areas may obscure localized pockets of

poverty which can be identified through the use of census data; (2)

school data show a target area to be close to the 50 percent threshold,

and census data may reveal specific portions of the school's attendance

area which meet the 50 percent criterion; or (3) mandatory bussing has

affected the percentage of free or reduced price eligibles in

neighborhood schools, and the school is unable to ``factor out'' the

pupils bussed in from other areas and provide the sponsor with data on

the percentage of free and reduced price eligibles in the area targeted

for expansion. In any of these circumstances, use of census data may

help a sponsor or State agency to more precisely ascertain a

neighborhood's true current income poverty status.

State CACFP administering agencies which also administer the SFSP

are aware that the Department recently contracted with the Bureau of

the Census for a ``special tabulation'' (or computerized list) of the

number and percentage of children eligible for free or reduced price

meals in every census ``block group'' in America. Census block groups

are sub-units of census tracts. Census tracts vary in size from 2,500

to 8,000 persons, with an average of approximately 4,000 persons per

tract. Census block groups, on the other hand, are defined by housing

units, numbering between 250 and 550 units, with an average of 400

units (or roughly 900 persons) per block group.

Because block groups generally include a relatively limited number

of children, we believe that the information contained in the special

tabulation will be an excellent tool for determining whether a target

area is eligible for expansion funding. This may be especially true in

rural areas, where pockets of poverty may be harder to identify in

school attendance areas and census tracts which are geographically much

larger than in urban areas. In order to facilitate implementation of

the two-tier reimbursement system, State agencies are already required

at section 226.6(f)(9) to provide sponsors with relevant census data.

Accordingly, this interim rulemaking amends section 226.2 by adding

a definition of ``low-income area'' which is based on paragraphs (b)

and (c), definition of tier I day care home, in section 226.2.

2. Automatic Eligibility of Federally Funded Income Eligible Head Start

Participants

Section 109(b) of Pub. L. 103-448 amended section 17(c)(5) of the

NSLA (42 U.S.C. 1766 (c)(5)) to make children who are enrolled in the

Head Start Program automatically eligible for free meal benefits in the

CACFP without further application or eligibility determination on the

basis of Head Start's low-income criteria. Specifically, amended

section 17(c)(5) of the NSLA states that a child shall be considered

automatically eligible for benefits under the CACFP without further

application or eligibility determination, if the child is ``enrolled as

a participant in a Head Start program authorized under the Head Start

Act (42 U.S.C. 9831 et seq.), on the basis of a determination that the

child is a member of a family that meets the low-income criteria

prescribed under section 645(a)(1)(A) of the Head Start Act (42 U.S.C.

9840(a)(1)(A)).''

The Head Start Program, administered by the U.S. Department of

Health and Human Services, is a national grant program providing

comprehensive child development services to low-income children and

their families. The number of children (slots) which the Head Start

grantee is to serve, as indicated on the grant award, is termed the

``funded enrollment.'' Although many States fund additional Head Start

slots in order to expand program access, these slots are not part of

the Head Start Program authorized under the Head Start Act. Therefore,

children in such State-funded slots are not covered by the above-

mentioned provision of Pub. L. 103-448 and are not automatically

eligible for free meals in the CACFP.

Head Start Program regulations (45 CFR 1305.4) require that at

least 90 percent of the children who are enrolled in each Head Start

Program must be from low-income families. That means

[[Page 9726]]

up to 10 percent of the children enrolled may be from families that

exceed the low-income guidelines. A low-income family is defined in 45

CFR 1305.2 as ``a family whose total annual income before taxes is

equal to, or less than, the income guidelines. For the purposes of

eligibility, a child from a family that is receiving public assistance

or a child in foster care is eligible even if the family income exceeds

the income guidelines.'' The term ``income guidelines,'' also defined

in 45 CFR 1305.2, means 100 percent of the Federal poverty guidelines,

which are adjusted for family size and to reflect annual changes in the

Consumer Price Index.

During the initial enrollment, applicant families must submit an

application which provides income information. For income-eligible

applicants, a Head Start employee signs a statement identifying the

documents examined and stating that the child is income eligible to

participate in the Program. If a child has been found income eligible

and is participating in a Head Start Program, he or she remains income

eligible through that enrollment year and the immediately succeeding

enrollment year. Generally, each child enrolled in a Head Start program

must be allowed to remain in Head Start until the child has entered

kindergarten or first grade. However, 45 CFR 1305.7 does allow a Head

Start Program to choose not to enroll a child where there are

compelling reasons for the child not to remain in Head Start, such as

when there is a change in the child's family income and there is a

child with a greater need for Head Start services.

The statutory language implementing this provision in the CACFP

sets forth two conditions regarding automatic eligibility for free

meals for Head Start participants. First, the child must be enrolled as

a participant in the Head Start Program under the Head Start Act (i.e.,

the children must be in a Federally-funded slot as part of Head Start's

``funded enrollment''). Under Head Start Program regulations (45 CFR

1305.2), ``enrollment'' means the official acceptance of a family by a

Head Start Program and the completion of all procedures necessary for a

child and family to begin receiving services.

Second, the child must be determined to be a member of a family

that meets the low-income criteria prescribed under the Head Start Act.

Such a determination is made by the Head Start grantee based on the

low-income criteria specified in 45 CFR 1305.2 of the Head Start

Program regulations (i.e., the household must be at or below 100

percent of the Federal poverty guidelines or must be eligible due to

receipt of public assistance or foster care). Children who participate

in Head Start but who are not determined to be income eligible, or

children who participate in a State-funded Head Start program, must

submit a free and reduced price application and be determined eligible

in order to receive free or reduced price CACFP meals.

In order to minimize the paperwork burden associated with the

automatic eligibility process, the Department has decided that the Head

Start statement of income eligibility completed upon initial enrollment

in the Head Start Program constitutes sufficient documentation of

automatic eligibility for free CACFP meals for the period of time the

child is enrolled as an income-eligible Head Start participant. If this

documentation is readily available to the official(s) designated by the

institution to determine eligibility for free CACFP meals, no further

action is necessary.

In those cases where the statement is not readily available, (e.g.,

``wrap around'' programs where the food service and the Head Start

Program are administered by separate entities), the CACFP determining

official must obtain documentation of the Head Start participants'

income eligibility in order to confer automatic eligibility for free

meals. Such documentation may simply consist of a list of the

children's names and a statement certifying that those children are

currently enrolled as participants in the Head Start Program based on a

determination that they are from families that meet the low-income

criteria prescribed under the Head Start Act. The documentation must

also include the date and the signature of a Head Start employee

authorized to provide the certification on behalf of the Head Start

office. At the beginning of each year, the CACFP determining official

must establish whether each child meets or continues to meet the

conditions for automatic eligibility. Finally, the Head Start statement

of income eligibility or, if applicable, the list of eligibles, are

subject to the same record retention requirements as other CACFP

records.

Accordingly, this interim rulemaking amends section 226.2 by adding

a new definition of ``Head Start participant'' and revising the

definitions of ``documentation,'' ``free meal,'' and ``verification''

to grant Federally-funded income eligible Head Start participants

automatic eligibility for free CACFP meals without further application

or eligibility determination. To reflect the addition of these new

definitions, this rulemaking also amends relevant parts of sections

226.23(d) and 226.23(e)(1).

3. Administrative Funds for Licensing

As previously discussed in this preamble, section 105(b)(1) of Pub.

L. 101-147 amended section 17(f)(3)(C) of the NSLA (42 U.S.C.

1766(f)(3)(C)) by providing expansion funds to family or group day care

home sponsoring organizations to reimburse such institutions for

administrative expenses related to expansion into low-income or rural

areas. Section 116(c) of Pub. L. 103-448 further amended section

17(f)(3)(C) of the NSLA by allowing funds for administrative expenses

to be used by family or group day care home sponsoring organizations

``to conduct outreach and recruitment to unlicensed family or group day

care homes so that the day care homes may become licensed.'' (Note:

Pub. L. 104-193 clarified the intent of this provision by deleting the

words ``outreach and recruitment'', but left intact the authority for

sponsors to use administrative funds to assist family day care homes in

becoming licensed.) This amendment to the NSLA was designed to ensure

that family and group day care homes desiring to participate in the

CACFP are not denied access to the Program strictly because they lack

the funds to comply with licensing standards.

In the past, the Department has always viewed outreach and

recruitment expenses as allowable administrative costs for the

sponsoring organization; however, the costs of meeting licensing

standards or of obtaining a license were viewed as an expense to the

day care home. Section 17(f)(3)(C) now allows sponsoring organizations

to use administrative, start-up, or expansion funds to assist family

and group day care providers who cannot get licensed simply because

they lack the funding to comply with licensing standards. For example,

a sponsoring organization may wish to assist family day care homes

which cannot be licensed or approved because they lack the funds to

purchase smoke detectors. As with all proposed administrative costs,

under this new provision, the sponsoring organization may request, in

its administrative budget, line item approval for the cost of the smoke

detectors or other items necessary for licensing, thereby assisting day

care homes in becoming licensed and eligible to participate in the

CACFP. Further guidance on this subject will be provided in an upcoming

revision to FNS Instruction 796-2, ``Financial Management--Child and

Adult Care Food Program.''

Because Pub. L. 103-448 does not mandate that administrative funds

be

[[Page 9727]]

limited to use by sponsoring organizations of family and group day care

homes that are physically located in low-income or rural areas, regular

administrative or start-up funds may be used for licensing-related

expenses, regardless of where the home is located. However, section

17(f)(3)(C)(i) of the NSLA specifically limits the use of expansion

funds to administrative expenses in support of homes located in low-

income or rural areas. This would include the use of expansion funds

for licensing-related expenses. The Department wants to stress that

this amendment to the NSLA does not increase the sponsor's potential

maximum total reimbursement levels; rather it authorizes a new

allowable expense category for the use of administrative funds (i.e.,

regular administrative, start-up, and expansion funds).

Although the law does not specifically mandate that administrative

fund requests for licensing-related expenses be limited to use by

family and group day care homes that are physically located in low-

income or rural areas, the Department believes that the law intended

for these funds to be made available only to those providers who are

financially in need. Therefore, we are requiring that providers

applying to participate in the CACFP also complete a free and reduced

price meal application when requesting administrative funds to cover

license-related expenses in order to verify their eligibility for free

or reduced price meals.

Requiring that providers meet the income eligibility requirements

for free and reduced price meals will ensure that public funds are

targeted to providers most in need of financial assistance in meeting

licensing standards and are not provided to individuals who have the

financial means to comply with licensing requirements on their own. In

addition, it will add very little burden for providers or sponsors,

since providers must already demonstrate free or reduced price

eligibility in order to receive reimbursement for meals served to their

own children.

The law itself places no dollar limit on the amount of

administrative funds which may be spent on license-related expenses.

However, the Department believes that it would be prudent to set a cap,

or ceiling, on such expenses. Given the lack of assurance that a home-

based provider will remain in the child care business for a given

length of time, the Department is establishing a $300 total limit per

home on license-related expenses so that payments can be controlled.

Examples of administrative expenses that the Department feels are

reasonable under this provision and which could readily be purchased

for less than $300, might include: (1) small items/equipment such as

smoke detectors, fire extinguishers, etc.; (2) licensing fees and

related expenses such as fingerprinting costs, the cost of health and

fire inspections, etc.; or (3) minor repairs such as the installation

of railings on a staircase to a basement where the day care operation

is being conducted. The Department is particularly interested in

receiving comments on whether this dollar limit (which is based on the

Low-Income Family Day Care Home Demonstration Project Final Report,

USDA, FNS, March 1993, which was designed to test various strategies

intended to increase low-income day care home participation in the

Program) will adequately protect against potential misuse of Federal

funds. The sponsor must have documented receipts to support these

administrative claims. Reimbursement may only be claimed for the actual

cost incurred. In addition, consistent with normal Program practice,

all claims under this provision must be submitted to the State agency

for the fiscal year in which the expense is incurred.

This new provision does not require day care home providers

receiving administrative funds from a sponsoring organization to stay

with the CACFP for any given period of time after receiving the funds.

However, CACFP sponsoring organizations will have some assurance that

day care home providers requesting these funds will join CACFP and

their sponsorship since providers will be required to complete both a

Program application through their sponsorship, and a free or reduced

price application before receiving any funding support. In addition, in

order to deter unnecessary requests, day care home providers must

provide to the sponsoring organization evidence of their application

for licensing and official documentation of the defects that are

impeding their licensing approval. These documents will be kept on file

in the sponsors office for later review by State Program staff and need

not accompany the sponsor's administrative budget or request for budget

adjustment. Finally, the Department wishes to emphasize that these

funds may only be used to assist a provider to comply with licensing

requirements. They may not be used for general remodeling or

renovation.

Accordingly, this interim rulemaking amends section 226.2 by

revising the definitions of ``Administrative costs'' and ``Start-up

payments'', and by adding a second sentence to the new definition of

``Expansion payments'', to allow sponsoring organizations of family or

group day care homes to use these funds for outreach and recruitment of

unlicensed day care homes as specified above. This interim rulemaking

also amends section 226.18(a) and adds a new section 226.16(k) to

establish requirements for day care homes requesting administrative

funds to cover license-related expenses.

List of Subjects in 7 CFR Part 226

Day care, Food assistance programs, Grant programs--health, infants

and children, Reporting and recordkeeping requirements, Surplus

agricultural commodities.

Accordingly, 7 CFR chapter II and part 226 are amended as follows:

Chapter II-Food and Nutrition Service, Department of Agriculture

1. The heading of 7 CFR chapter II is revised to read as set forth

above.

Chapter II--[Amended]

2. In 7 CFR chapter II (consisting of parts 210 through 299) all

references to ``Food and Consumer Service'' are revised to read ``Food

and Nutrition Service'' and all references to ``FCS'' are revised to

read ``FNS''.

PART 226--CHILD AND ADULT CARE FOOD PROGRAM

3. The authority citation for Part 226 continues to read as

follows:

Authority: Secs. 9, 11, 14, 16, and 17, National School Lunch

Act, as amended (42 U.S.C. 1758, 1759a, 1762a, 1765 and 1766).

4. In section 226.2:

a. New definitions of Expansion payments, Head Start participant,

Low-income area, and Rural area are added in alphabetical order.

b. The definitions of Administrative costs and Start-up payments

are amended by adding a new sentence to the end of each paragraph.

c. The definition of Documentation is amended by removing the

period at the end of paragraph (d)(2), adding the word ``;or'', and

adding new paragraph (e).

d. The definition of Free meal is amended by revising the first

sentence.

e. The definition of Program payments is amended by adding the

words ``expansion payments,'' between the words ``payments,'' and

``advance''.

f. The definition of Verification is amended by revising all text

after the third sentence.

The additions and revisions specified above read as follows:

[[Page 9728]]

Sec. 226.2 Definitions.

* * * * *

Administrative costs * * * These administrative costs may include

administrative expenses associated with outreach and recruitment of

unlicensed family or group day care homes and the allowable licensing-

related expenses of such homes.

* * * * *

Documentation * * *

(e) For a child who is a Head Start participant, the Head Start

statement of income eligibility issued upon initial enrollment in the

Head Start Program or, if such statement is unavailable, other

documentation from Head Start officials that the child's family meets

the Head Start Program's low-income criteria.

* * * * *

Expansion payments means financial assistance made available to a

sponsoring organization for its administrative expenses associated with

expanding a food service program to day care homes located in low-

income or rural areas. These expansion payments may include

administrative expenses associated with outreach and recruitment of

unlicensed family or group day care homes and the allowable licensing-

related expenses of such homes.

* * * * *

Free meal means a meal served under the Program to a participant

from a family which meets the income standards for free school meals;

or to a child who is automatically eligible for free meals by virtue of

food stamp, FDPIR, or AFDC recipiency; or to a child who is a Head

Start participant; or to an adult participant who is automatically

eligible for free meals by virtue of food stamp or FDPIR recipiency or

is a SSI or Medicaid participant. * * *

* * * * *

Head Start participant means a child currently receiving assistance

under a Federally-funded Head Start Program who is categorically

eligible for free meals in the CACFP by virtue of meeting Head Start's

low-income criteria.

* * * * *

Low-income area means a geographical area in which at least 50

percent of the children are eligible for free or reduced price school

meals under the National School Lunch Program and the School Breakfast

Program, as determined in accordance with paragraphs (b) and (c),

definition of tier I day care home.

* * * * *

Rural area means any geographical area in a county which is not a

part of a Metropolitan Statistical Area or any ``pocket'' within a

Metropolitan Statistical Area which, at the option of the State agency

and with FNSRO concurrence, is determined to be geographically isolated

from urban areas.

* * * * *

Start-up payments * * * These start-up payments may include

administrative expenses associated with outreach and recruitment of

unlicensed family or group day care homes and the allowable licensing-

related expenses of such homes.

* * * * *

Verification * * * However, if a food stamp, FDPIR or AFDC case

number is provided for a child, verification for such child shall

include only confirmation that the child is included in a currently

certified food stamp or FDPIR household or AFDC assistance unit. If a

Head Start statement of income eligibility is provided for a child,

verification for such child shall include only confirmation that the

child is a Head Start participant. For an adult participant, if a food

stamp or FDPIR case number or SSI or Medicaid assistance identification

number is provided, verification for such participant shall include

only confirmation that the participant is included in a currently

certified food stamp or FDPIR household or is a current SSI or Medicaid

participant.

* * * * *

5. In section 226.4:

a. Paragraph (e) is amended by adding the words ``and expansion''

after the word ``start-up'' in the paragraph heading and each time it

appears in the text.

b. Paragraph (f) is amended by adding the word ``, expansion''

between the words ``start-up'' and ``and''.

6. In section 226.6:

a. Paragraph (c)(3) is amended by adding the words ``or expansion''

between the words ``start-up'' and ``payments''.

b. Introductory text of (k) is amended by adding the words ``or

expansion'' between the words ``start-up'' and ``payments'' in the

first sentence.

7. In section 226.7:

a. Paragraph (h) is amended by adding the words ``and expansion''

after the word ``start-up'' in the paragraph heading and text.

b. Paragraph (j) is amended by adding the word ``, expansion''

between the words ``start-up'' and ``and''.

8. In section 226.12:

a. Paragraph (a) is amended by adding the heading ``General.''

before the first sentence.

b. Paragraphs (b) through (e) are removed and a new paragraph (b)

is added to read as follows:

Sec. 226.12 Administrative payments to sponsoring organizations for

day care homes.

* * * * *

(b) Start-up and expansion payments. (1) Prospective sponsoring

organizations of day care homes, participating sponsoring organizations

of child care centers or outside-school-hours care centers, independent

centers, and participating sponsoring organizations of less than 50

homes which meet the criteria in paragraph (b)(2) of this section shall

be entitled to receive start-up payments to develop or expand

successful Program operations in day care homes. Participating

sponsoring organizations of day care homes which meet the criteria in

paragraph (b)(2) of this section shall be entitled to receive expansion

payments to initiate or expand Program operations in day care homes in

low-income or rural areas. The State agency shall approve start-up

payments only once for any eligible sponsoring organization, but may

approve expansion payments for any eligible sponsoring organization

more than once, provided that: the request must be for expansion into

an area(s) other than that specified in their initial or prior request;

and 12 months has elapsed since the sponsoring organization has

satisfied all obligations under its initial or prior expansion

agreement. Eligible sponsoring organizations which have received start-

up payments shall be eligible to apply for expansion payments at a date

no earlier than 12 months after it has satisfied all its obligations

under its start-up agreement with the State agency.

(2) Sponsoring organizations which apply for start-up or expansion

payments shall evidence:

(i) Public or tax-exempt status, or moving toward compliance with

the requirements for IRS tax-exempt status, in accordance with

Sec. 226.15(a);

(ii) An organizational history of managing funds and ongoing

activities (i.e., administering public or private programs);

(iii) An acceptable and realistic plan for recruiting day care

homes to participate in the Program (such as the method of contacting

providers), which may be based on estimates of the number of day care

homes to be recruited and information supporting their existence, and

in the case of

[[Page 9729]]

sponsoring organizations applying for expansion payments, documentation

that the day care homes to be recruited are located in low-income or

rural areas; and

(iv) An acceptable preliminary sponsoring organization management

plan including, but not limited to, plans for preoperational visits and

training.

(3) The State agency shall deny start-up and expansion payments to

applicant sponsoring organizations which fail to meet the criteria of

paragraph (b)(2) of this section or which have not been financially

responsible in the operation of other programs funded by Federal,

State, or local governments. The State agency shall notify the

sponsoring organization of the reasons for denial and allow the

sponsoring organization full opportunity to submit evidence on appeal

as provided for in Sec. 226.6(k). Any sponsoring organization applying

for start-up or expansion funds shall be notified of approval or

disapproval by the State agency in writing within 30 calendar days of

filing a complete and correct application. If a sponsoring organization

submits an incomplete application, the State agency shall notify the

sponsoring organization within 15 calendar days of receipt of the

application and shall provide technical assistance, if necessary, to

the sponsoring organization for the purpose of completing its

application.

(4) Sponsoring organizations which apply for and meet the criteria

for start-up or expansion payments shall enter into an agreement with

the State agency. The agreement shall specify:

(i) Activities which the sponsoring organization will undertake to

initiate or expand Program operations in day care homes;

(ii) The amount of start-up or expansion payments to be issued to

the sponsoring organization, together with an administrative budget

detailing the costs which the sponsoring organization shall incur,

document, and claim;

(iii) The time allotted to the sponsoring organization for the

initiation or expansion of Program operations in family day care homes;

(iv) The responsibility of the applicant sponsoring organization to

repay, upon demand by the State agency, start-up or expansion payments

not expended in accordance with the agreement.

(5) Upon execution of the agreement, the State agency shall issue a

start-up or expansion payment to the sponsoring organization in an

amount equal to not less than one, but not more than two month's

anticipated administrative reimbursement to the sponsoring organization

as determined by the State agency. However, no sponsoring organization

may receive start-up or expansion payments for more than 50 day care

homes. Eligible sponsoring organizations with fewer than 50 homes under

their jurisdiction at the time of application for start-up payments may

receive such payments for up to 50 homes, less the number of homes

under their jurisdiction. Eligible sponsoring organizations applying

for expansion funds may receive at a maximum such payments for up to 50

homes at the currently assigned administrative payment for the first 50

homes. In determining the amount of start-up or expansion payments to

be made to a sponsoring organization, the State agency shall consider

the anticipated level of start-up or expansion costs to be incurred by

the sponsoring organization and alternate sources of funds available to

the sponsoring organization.

(6) Upon expiration of the time allotted to the sponsoring

organization for initiating or expanding Program operations in day care

homes, the State agency shall obtain and review documentation of

activities performed and costs incurred by the sponsoring organization

under the terms of the start-up or expansion agreement. If the

sponsoring organization has not made every reasonable effort to carry

out the activities specified in the agreement, the State agency shall

demand repayment of all or part of the payment. The sponsoring

organization may retain start-up or expansion payments for all day care

homes which initiate Program operations. However, no sponsoring

organization may retain any start-up or expansion payments in excess of

its actual costs for the expenditures specified in the agreement.

9. In section 226.16, a new paragraph (k) is added to read as

follows:

Sec. 226.16 Sponsoring organization provisions.

* * * * *

(k) Before sponsoring organizations expend administrative funds to

assist family day care homes in becoming licensed, they shall obtain

the following information from each such home: a completed free and

reduced price application which documents that the provider meets the

Program's income standards; evidence of its application for licensing

and official documentation of the defects that are impeding its

licensing approval; and a completed CACFP application. These funding

requests are limited to $300 per home and are only available to each

home once.

10. In section 226.17, paragraph (b)(7) is amended by adding a new

sentence at the end of the paragraph to read as follows:

Sec. 226.17 Child care center provisions.

* * * * *

(b) * * *

(7) * * * In addition, Head Start participants need only have a

Head Start statement of income eligibility, or a statement of Head

Start enrollment from an authorized Head Start representative, to be

eligible for free meal benefits under the CACFP.

* * * * *

11. In section 226.18, the introductory text of paragraph (a) is

revised to read as follows:

Sec. 226.18 Day care home provisions.

(a) Day care homes shall have current Federal, State or local

licensing or approval to provide day care services to children. Day

care homes which cannot obtain their license because they lack the

funding to comply with licensing standards may request a total limit

per home of $300 in administrative funds from a sponsoring organization

to assist them in obtaining their license. Day care homes that, at the

option of their sponsoring organization, receive administrative funds

for licensing-related expenses must complete documentation requested by

their sponsor as described in Sec. 226.16(k) prior to receiving any

funds. Day care homes which are complying with applicable procedures to

renew licensing or approval may participate in the Program during the

renewal process, unless the State agency has information which

indicates that renewal will be denied. If licensing or approval is not

available, a day care home may participate in the Program if:

* * * * *

12. In Section 226.23:

a. Paragraph (d) is amended by revising the fifth sentence.

b. Paragraph (e)(1)(i) is amended by adding a new sentence to the

end of the paragraph.

c. Paragraph (e)(1)(ii)(F) is amended by revising the first and

fifth sentences.

The addition and revisions specified above read as follows:

Sec. 226.23 Free and reduced price meals.

* * * * *

(d) * * * The release issued by child care institutions shall also

announce that children who are members of AFDC assistance units, food

stamp or FDPIR households, or are Head Start participants are

automatically eligible to receive free meal benefits. * * *

(e)(1) * * *

(i) * * * Furthermore, such forms and materials distributed by

child care

[[Page 9730]]

institutions shall state that if a child is a Head Start participant,

the child is automatically eligible to receive free Program meal

benefits, subject to submission by Head Start officials of a Head Start

statement of income eligibility or income eligibility documentation.

(ii) * * *

(F) A statement which includes substantially the following

information: ``Section 9 of the National School Lunch Act requires

that, unless you provide a food stamp, FDPIR or AFDC case number for

your child, or unless a Head Start statement of income eligibility or

income eligibility verification is provided for your child, you must

provide the social security numbers of all adult members of your

household in order for your child to be eligible for free or reduced

price meals.'' * * * These verification efforts may be carried out

through program reviews, audits, and investigations and may include

contacting employers to determine income, contacting a food stamp,

Indian tribal organization, welfare, or Head Start office to determine

current certification for receipt of food stamps, FDPIR or AFDC

benefits, or participation in Head Start, contacting the State

employment security office to determine the amount of benefits

received, and checking the documentation produced by household members

to prove the amount of income received. * * *

* * * * *

Dated: February 13, 1998.

Shirley R. Watkins,

Under Secretary, Food, Nutrition and Consumer Services.

[FR Doc. 98-4949 Filed 2-25-98; 8:45 am]

BILLING CODE 3410-30-P